How does over-supply affect prices and consumer perceptions of a product?

Answer and Explanation

Over-supply is when the quantity of goods in the market is very high and beyond what is required by the consumers or the customers. Since the market always settles at the point where supply equals demand.Over supply  will ultimately lead to the reduction of the prices.  This  will result in a reduction in profits and an increase in inventory of unsold goods. This will lead to losses because the supply has risen thus the market has flooded with  same commodities leading to  low prices. In every market the stock is determined by the demand and supply.

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